Lessons in extortion by El Salvador’s gangs

July 14, 2013

Although the gangs may not be using the proceeds to fund international terrorism, the shakedowns of local businessmen are very reminiscent of terrorist fundraising activity by ETA in Spain and by Islamist militants in Afghanistan, Pakistan, Somalia, and Iraq.

InSight Crime has the analysis, which may provide some useful lessons for counter-terror finance analysts:

2 Businesses Per Week Shut Down by Extortion in El Salvador

Around 70 percent of the 11,730 businesses registered with the National Council for Small Businesses (Conapes) reported being extorted by gangs, according to the group’s director Ernesto Vilanova.

The head of El Salvador’s Chamber of Commerce, Federico Hernandez, confirmed the practice is widespread and said extortion, along with the government failing to pay contractors on time, is the main factor behind an increase in closures of small and micro-businesses — classified as businesses employing between one and 50 people.

Hernandez said the Chamber had registered a rapid acceleration in the number of businesses forced to close over the last five months and that the situation was worse now than at any point in his four-year stint at the head of the organization.

According to Vilanova, despite the truce between the two street gangs behind most of the extortion, the Mara Salvatrucha (MS-13) and Barrio 18, there is little optimism in the business community that the situation will improve. “This is never going to end,” he said. “They arrest three, but there are thousands more out there.”

InSight Crime Analysis

The comments made by the two Salvadoran business organizations highlight the crippling economic impact of extortion, especially in developing economies where most opportunities for employment are with small and micro-businesses.

Worryingly, they also add weight to reports that the since the gang truce, far from leading to a reduction has actually seen an increase in extortion…

This ongoing problem illustrates that gang war truces may not be as effective as everybody hoped for, especially when the underlying reason for the conflict isn’t addressed. Will this be a lesson for those seeking to broker a truce with the Taliban? Or will we look back months after a “peace deal” is signed and wonder why ordinary Afghan businessmen and farmers are being ripped off once again by the tax men of the Taliban?